Economic Analysis of the Effects of Eastern Australia's LNG Exports in Asia-Pacific on Domestic Gas Users

33 Pages Posted: 11 Nov 2014

See all articles by Tuong Che

Tuong Che

Australian National University (ANU)

Tom Kompas

University of Melbourne

Date Written: November 9, 2014

Abstract

Rapid LNG trade in the eastern region will contribute a significant source of export revenue, or roughly A$20-30 billion per year over the next five years. However, along with a significant gain from LNG trade, major domestic gas users will also face higher gas prices, less security over long term contracts and more uncertainty over gas supplies generally. This paper develops a modelling approach and an applied analysis of the effect of LNG trade in Asia-Pacific region on major eastern Australian domestic gas users over the period 2015–30. During the study period, the average Net Present Value of consumer losses (at a discount rate of 5 per cent per year) is estimated to be from A$1.1 to A$1.4 billion per year. Among the major gas-using sectors, losses among the large industry sector are largest, accounting for half of total consumer loss or about A$450 to A$750 million per year. The electricity power sector is estimated to lose about A$194 to A$307 million per year. The losses from residential, commercial and other users is estimated to be about A$248 to A$405 million per year. The consumer loss in the eastern states is ranked (from top-to-bottom) by Queensland, Victoria, New South Wales and South Australia. Losses vary by different major domestic gas users by state.

Keywords: Natural gas, liquefied natural gas pricing, LNG trade, Asia and the Pacific, LNG export, domestic gas use, Australia

Suggested Citation

Che, Tuong and Kompas, Tom, Economic Analysis of the Effects of Eastern Australia's LNG Exports in Asia-Pacific on Domestic Gas Users (November 9, 2014). Crawford School Research Paper No. 14-10, Available at SSRN: https://ssrn.com/abstract=2521191 or http://dx.doi.org/10.2139/ssrn.2521191

Tuong Che (Contact Author)

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

Tom Kompas

University of Melbourne ( email )

Parkville, Victoria
Melbourne, Victoria 3010
Australia

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